Euronext trades on its system integration skills in bid for London Stock Exchange

European stock exchange Euronext is maintaining its drive to take over the London Stock Exchange. And experts have said it is...

European stock exchange Euronext is maintaining its drive to take over the London Stock Exchange. And experts have said it is well placed to cope with the technical and cultural challenges of merging IT systems if its bid is successful.

Euronext would have to convince users of the London Stock Exchange that any acquisition would not cause technical disruption. However, analysts said Euronext has a strong track record of integration.

The comments came as Euronext mounted a charm offensive aimed at winning shareholder support for its proposed bid. Earlier this month, German exchange Deutsche Borse withdrew its £1.3bn bid.

Chris Skinner, managing director, international advisory services at research company Tower Group, said Euronext's acquisition of the London-based international derivatives market Liffe and its integration of clearing subsidiary Clearnet with the London Clearing House meant it had a track record in large IT integration projects.

"Euronext has moved forward with a variety of mergers and acquisitions from its founding with the merger of the Amsterdam, Brussels and Paris stock exchanges in 2000, through the assimilation of Liffe, the London Clearing House and the Portuguese Stock Exchange," said Skinner. "Euronext knows what it is doing, how to do it and how to make it work."

Skinner estimated it would take about 18 months to integrate IT systems between the London Stock Exchange and Euronext in the event of a merger.

Rick Cudworth, risk partner at professional services firm KPMG, said Euronext would need to pay particular attention to reassuring users of the trading systems that an acquisition will not create technical disruption.

"Continuity of service is paramount, for example, the compatibility and testing of new systems will be important considerations. Strong programme and stakeholder management in any technical transition or infrastructure consolidation would help ensure risks are minimised.

"There is likely to be a significant 'hearts and minds' element to any programme, hence the need for strong stakeholder management, as well as the need to manage the risk of any technical or infrastructure changes."

Euronext's IT plan

Euronext has outlined details of its proposed bid for the London Stock Exchange, placing promised IT cost savings at the heart of its offer.

In a document published last month, Euronext said acquiring the London Stock Exchange would create annual pre-tax savings of £109m. IT will account for more than half of these savings at £65m. Euronext declined to put a value on its bid. Most IT savings (£45m) would come from migrating cash trading to a single electronic trading system, but Euronext said this would only be done after consultation with users.

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